Adjudicator unlikely to stop retailers abusing suppliers

By Rod Addy

- Last updated on GMT

Related tags Ethics

The retail promotional system is flawed, unsustainable and needs a complete overhaul, although manufacturers are divided over the ability of the Groceries Supply Code of Practice (GSCOP) or the new adjudicator to tackle this.

One md told Food Manufacture some retailers were engaging in commercially damaging tactics. "Some instances see retailers sell at a loss, which other retailers follow,"​ he said. "Sadly it's now very little to do with consumer choice or value, but purely margin for the buyers who all make short-term decisions, as they stay little more than a year or two in the role."

In addition, supermarkets were using unethical "stealth taxes"​, including claiming for longer promotional periods than they were running, thus getting surplus food on discount.

Complaint fees

Other practices exposed by sources included charging unreasonably large fees for complaints and product withdrawals. "Cost of consumer complaints are charged at between £50£75 each, despite product selling value being as little as 50p and consumers being reimbursed only this value," ​said one manufacturer.

"If products are withdrawn due to quality or safety issues, fines can easily start at £25,000 and exceed £80,000, which is never the true cost of managing such instances."

One md said retailers' practices were not illegal, but "ethically and morally they push boundaries and they only do this because of their huge size".

Another md agreed promotions needed an overhaul, but partly blamed suppliers. "I do not support either the concept of the adjudicator or the proposed structure of fines,"​ he said.

"What suppliers have to do is establish the correct internal systems to ensure that all promotions they agree to are actually beneficial there is no point in trying to shut the stable door after the horse has bolted."

The comments were made in the wake of the Department for Business, Innovation and Skills (BIS) Select Committee delivering feedback on the draft GSCOP Bill to BIS last month.

Whistle blowers

The Committee recommended fines for code breaches be imposed from the outset of the proposed new GSCOP regime. It also said 'whistle blowers' should be allowed to complain anonymously and should be allowed to do so through trade groups.

Terry Jones, communications director at the Food and Drink Federation, welcomed the Select Committee's views. "We were pleased about the role trade associations can play, where they can flag up abuses in the market."

Responding to claims from retailers and the British Retail Consortium that an adjudicator would add bureaucracy and cost, Jones said: "It won't stifle relations, but will give a clearer framework for business."

A BIS spokeswoman said: "We will publicly respond this side of Christmas. We want to put the Bill to Parliament in its annual second session, which runs from November."

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